US stocks experienced a broad sell-off on Friday, driven by persistent investor concerns. All three major indexes closed significantly lower, with the Dow Jones Industrial Average dropping 1.05%, the S&P 500 falling 0.43%, and the Nasdaq Composite declining 0.92%. This marked the largest monthly percentage declines in a year for the S&P 500 and Nasdaq, while the Dow managed to eke out its tenth consecutive month of gains, its longest winning streak since early 2018. The market weakness stemmed from uncertainties surrounding artificial intelligence, revived tariff anxieties, and escalating geopolitical tensions.
Financial stocks took a hit following reports of potential losses for Barclays, Jefferies, Wells Fargo, and other banks related to the collapse of UK mortgage provider Market Financial Solutions Ltd, raising concerns about lending standards. Wells Fargo, for example, is a multinational financial services company providing banking and investment services. Jefferies is a global investment banking and capital markets firm providing financial advisory and capital raising services. Technology shares also continued to weigh on the indexes, with lingering AI fears dragging down chips and software sectors.
On the upside, defensive sectors such as consumer staples, healthcare, and utilities outperformed as investors sought safer havens. Block surged after announcing workforce reductions to integrate AI across its operations. Dell also saw a significant jump after projecting substantial revenue growth from its AI-optimised servers business. Conversely, Zscaler, a cloud security firm, experienced a sharp decline following a disappointing earnings report.
Economic data further dampened market sentiment, with a hotter-than-expected Producer Price Index reinforcing expectations that the US Federal Reserve is unlikely to cut interest rates in the near future. Market participants are pricing in a high probability that the Fed will maintain its current rate at the upcoming March meeting.
